THE PHENOM CRYPTO LETTER

GM,

Welcome to the Phenom Weekly Update—your one-stop shop for all the crypto news that actually matters (and some that probably doesn't). We cut through the hype, break down the week’s big events, and offer a front-row seat to the ongoing circus that is Crypto Twitter.

Here’s what we’ve got this week:

• The FED Rate Cut ✂️

• Reasons to be Bullish 🐂

• Trading Long Term 📈

Jump to :

• Reading Corner

• Blockbuzz

• Crypto Twitter

• Memes

📉 The Fed’s 50-Basis-Point Drop – Déjà Vu Disaster?

The Fed just dropped a 50-basis-point rate cut. We’ve all been clammering for rate cuts but a 50bps cut is a big deal. They've only done this twice before—2001 and 2007. Ring a bell? Both times were followed by major economic crises. So, why should we care? Well, history doesn’t always repeat, but it sure loves rhyming.

Here’s the scoop:

• Past Cuts = Trouble: In 2001 and 2007, rate cuts this large were followed by market crashes of up to 31%. S&P 500 tanked, investors panicked, and Wall Street had a meltdown. 💸

• Recession Fears: Futures markets are betting more cuts are coming, which usually means a recession is around the corner. The Fed says they can "soft land" this plane—think a smooth touchdown. But thats easier said than done. There isn’t much precedent for a successful soft landing 🛬

• Reality Check: Despite the Fed's optimism, the market is signaling, “Hold on, we’ve seen this movie before.” When cuts like this happen, it’s usually because the economy is struggling to stay afloat. 📉

Should we all be bracing for impact? The big question is whether we’re heading for another 2008-style crash or if the Fed can pull off a soft landing. Hoping for a smooth ride. More G5 than Spirit Air.

Reason to not be Bearish on Crypto

Feeling Bearish? The September Slump will do that. I know you just read about how the big Fed cut often proceeds a recession but here are some reasons why we think Q4 will be Bullish:

• Global liquidity is on the upswing

• Rate cuts are here. The Fed cut 50bps yesterday

• Crypto Adoption rates continue to rise

• Microstrategy is still buying as much BTC as possible

• Q4 is historically the best period for positive price action

Stay in the market and take the ride this fall.

Trading Beyond Short-Term Fluctuations

Trading can be a rollercoaster ride. Even seasoned traders occasionally encounter trades that don't pan out as expected. It's not uncommon to sidestep the market only to watch it surge upward, leading to missed opportunities rather than direct losses. But as any experienced trader knows, this is all part of the journey.

The Myth of the Hit Rate

New traders and those less experienced often fixate on their hit rate—the percentage of successful trades—especially over short observation periods. However, this metric is one of the least important when evaluating long-term trading success. Trading isn't about winning every trade; it's about achieving a stable and predictable performance expectancy over extended periods, typically five years or more.

Understanding Expectancy

At the core of successful trading is the concept of expectancy, which can be calculated using the formula:

Expectancy = (Probability of Win × Average Win) – (Probability of Loss × Average Loss)

This formula underscores the importance of both the probability of winning and the size of those wins relative to losses. It's not just about how often you win, but how much you gain when you do win versus how much you lose when you don't.

The Long-Term Perspective

Short-term setbacks—even a year or two of underperformance—should be anticipated and accepted as part of the trading landscape. Evaluating performance solely on recent trades or year-to-date results can be misleading. Instead, you should measure your success against broader economic indicators, such as the global monetary debasement rate, which averages around 15% annually. Surpassing this rate consistently means you're effectively preserving and growing your wealth.

Benchmarking Against Bitcoin

In today's financial system, I choose to benchmark my performance against Bitcoin's growth. Valuing wealth in terms of Bitcoin rather than traditional fiat currencies like dollars. This offers a different perspective on wealth accumulation and preservation. If your trading strategies have outperformed Bitcoin over the past decade, that's a significant achievement. Even if you haven’t beat Bitcoin, you’re still proabaly beating every traditional investment vehicle.

Keys to Successful Trading

To navigate the complexities of the market and enhance long-term success, consider adhering to these fundamental principles:

1. Develop a Positive Expectancy Trading System: Craft a strategy where the expected value of trades is positive over time.

2. Apply the System in Optimal Market Conditions: Utilize your strategy when market conditions align with its strengths.

3. Execute Relentlessly and Emotionlessly: Stick to your plan without making impulsive changes or letting emotions dictate decisions, ensuring a statistically significant number of trades to validate performance.

4. Adjust When Necessary: Only consider modifying your strategy if it consistently underperforms over a substantial dataset.

Trading is not about quick wins or reacting to every market movement. It's a disciplined practice that requires patience, strategy, and a long-term outlook. By focusing on expectancy, benchmarking appropriately, and adhering to a well-devised plan, you can navigate the inevitable ups and downs of the market and work towards sustained success.

READING CORNER

A collection of longer form content we are consuming this week 

NEWS

Quick Hitters from the week

• Sky Rebrand and Token Migration: Sky launches a new dApp and introduces tokens SKY and USDS, allowing users to migrate their MKR and DAI tokens to the new platform.

• Binance Co-Founder CZ Set for Release: Changpeng Zhao is scheduled for release from US custody on Sept. 29, following an amended SEC complaint against Binance.

• MicroStrategy Expands Bitcoin Holdings: Purchases an additional 18,300 BTC, bringing its total Bitcoin stash to $14.14 billion, funded by selling over 8 million company shares.

• Vitalik Buterin Sets New Standards for Layer-2 Networks: Starting in 2025, Ethereum's co-founder will only endorse Layer-2 networks that meet "Stage 1+" standards, emphasizing enhanced security and decentralization.

• Trump Family’s World Liberty Financial Confirms Token Plan: In a recent X Spaces discussion, officials confirm the project’s non-transferable governance token, available under an SEC Regulation D exemption.

• Jamie Dimon on JPMorgan’s Blockchain Use: Dimon highlights JPMorgan Chase's significant use of blockchain, signaling the bank's embrace of the technology.

• : The FTX founder, currently six months into a 25-year sentence, files for an appeal and requests a new trial.

THE TWITTERVERSE

A collection of the most interesting stuff on Crypto Twitter this week

MEMES

For the (crypto) Culture

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